In most areas of business several entities compete for the same set of potential customers. Consequently, each business must aggressively pursue marketing strategies to attract customers and induce customer loyalty to their particular establishment. For example, the grocery store industry is highly competitive. There are approximately seventy-five large supermarket chains in the United States. In an attempt to attract customers, members of the grocery store industry have employed a number of different promotions such as frequent shopper programs and weekly coupon specials. Despite these efforts, however, customer loyalty is no longer inherent due to the intense competition.
Conventional methods of attracting and developing customer loyalty to a supermarket chain include television and radio advertising to promote particular stores. In addition, some stores offer free standing inserts (FSIs), coupons, and loss leaders in order to attract consumers. These methods, however, erode the gross margin of the stores without retaining the stores' best customers. Furthermore, weekly-advertised specials and coupons by their very nature only attract customers for a particular time period. Since the specials or discounts typically vary from week to week, there is no guarantee or likelihood that a store will be discounting exactly what the customer is interested in buying every grocery trip. Most customers, therefore, scan the weekly advertisement of every grocery store in their area before doing their weekly grocery shopping and choose to go to the store that most meets their needs. Hence, the customer is not loyal to a single store or chain of stores.
Another attempt to attract customers is the implementation of a frequent shopper program. Such a program typically provides a customer with a frequent shopper card that is to be presented at the time of a transaction. Presentation of the card identifies the customer and enables the customer to receive preferential treatment, such as discounts on specific items purchased. Essentially, these frequent shipper programs act much like a paperless coupon redemption system. The frequent shopper programs are also used by the business to track a customer's shopping habits. The frequent shopper card includes a customer identifier that enables the retailer to identify, record and track a customer's purchases. The customer's shopping history may then be used to perform targeted marketing functions, such as compiling mailing lists of recipients of advertising material or printing out point-of-sale (POS) coupons for the customer.
While the frequent shopper program may succeed in attracting the customer to the store on an occasional basis, the program does not successfully ensure the loyalty of the customers. Since many stores have a frequent shopper program, customers may simply acquire a frequent shopper card for every chain of stores in their area and make purchases at the chain that offers the best specials or is the most convenient at any particular time. Accordingly, a frequent shopper program does not provide any incentive (i.e. reward or penalty) for visiting the store on a consistent basis.
A further drawback of the prior art frequent shopper systems is their failure to identify and reward their most frequent and loyal customers over and above less frequent or loyal customers. For example, grocery stores make approximately eighty percent of their revenue from only about thirty percent of their customers. It would therefore be beneficial for the grocery stores to reward and retain as many of the “thirty percent” customers as possible.
Some businesses employ reward programs in order to attract and develop customer loyalty. An example of a typical reward program is one implemented by Arby's, a fast-food chain. The Arby's reward program enables customers to earn prizes that increase in value through a series of sixteen visits, after which the prizes revert to their minimal value and the cycle repeats. Once the maximum prize value is achieved, however, the customer's account is “reset”, thus eliminating the customer's incentive to continue choosing Arby's over another fast-food chain. In addition, the Arby's reward program does not promote frequent visits, since there is no time requirement within which the sixteen visits must be made. Thus, the benefits, if any, may be spread over a substantial amount of time.
With the considerable number of businesses in any given area, there exists a need for systems and processes which provide a given business with the ability to reward a particularly loyal customer for consistent patronage to their establishment and to promote and reinforce the customer's loyalty.